UPDATE 4-Rio Tinto, Mongolia end stand-off to build huge copper mine

Tue May 19, 2015 1:16pm EDT
 
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* Bellwether project seen reviving investment in Mongolia mining

* Oyu Tolgoi underground mine cost last estimated at $5 bln

* Mine seen as best undeveloped growth project held by big miners (Adds Turquoise Hill stock price move, financing expectations)

By Terrence Edwards and Sonali Paul

ULAN BATOR/MELBOURNE, May 19 (Reuters) - Mongolia and Rio Tinto have reached an agreement paving the way for work to resume on a stalled $5 billion underground copper mine that is expected to drive growth for both the country and the global miner.

The Oyu Tolgoi project, which started producing from an open pit mine two years ago, is the biggest single foreign investment in Mongolia, and resolution of the disputes over the second phase has revived hopes for a string of other stalled mining projects.

Rio Tinto's Turquoise Hill Resources arm owns 66 percent of Oyu Tolgoi, while the Mongolian government owns the remainder. Rio is operator of the project, located in the Gobi desert near Mongolia's border with China.

Vancouver-based Turqoise Hill shares leapt by as much as 11 percent to C$5.80 on the Toronto Stock Exchange on Tuesday after Rio Tinto announced the agreement on Monday which it said was signed by itself, Turquoise Hill and the government of Mongolia.

Turqoise Hill shares were last trading at $5.49, 4.8 percent higher on the day.   Continued...